Physicians' Income Continues to Climb Income is always a key benchmark for physicians, whether the criterion is earning enough to live a comfortable life or feeling that earnings compensate for the aggravation, rules and regulations, electronic health record (EHR) frustrations, and other challenges of the profession. Medscape's 2017 Physician Compensation Report points to some good news for doctors as well as intriguing findings about other aspects of medical practice. Despite some ups and downs for certain specialties, average income for all physicians in Medscape's annual report has risen steadily since 2011. In this 6-year period, average income has risen from $206,000 in the 2011 report to $294,000 this year. Medscape recently released its seventh annual Physician Compensation Report, which is the most comprehensive and widely used physician salary survey in the United States. Over 400,000 US physicians have used this report to access salary information and other key measures related to their practice situation. More than 19,200 physicians in over 27 specialties responded to this year's Medscape compensation survey. The increase in income is welcome news, considering that payers have not been appreciably raising reimbursement rates and very few new sources of income have opened up, says Travis Singleton, senior vice president of Merritt Hawkins, a national physician recruitment firm based in Texas. "There's virtually no new money—that is, money from payers—coming into the system," he says. For employed physicians, the new money has been ponied up by employers. Hospitals, group practices, and other organizations have been instrumental in employing physicians. They are trying to get ready for an emerging system of population-based medicine. "Size is needed," he says, to create accountable care organizations (ACOs) and other value-based systems. Employers have been bidding up salaries. Self-employed physicians, for their part, have survived a die-off of many independent practices and have emerged tougher and more resilient than before, he says. "The most competitive practices are still standing," Singleton says. "They make up for stagnant reimbursements by raising volume, being more efficient, and choosing better payers." Specialist–Primary Care Pay Gap Hasn't Changed According to this year's survey, specialists earn $316,000 a year and primary care physicians (PCPs) earn $217,000. That's a pay gap just shy of $100,000, with specialists making 45.6% more than what PCPs make. That percentage gap has not changed at all since the 2015 Medscape report, when specialists' earnings were also 45.6% higher—$284,000 for specialists versus $195,000 for PCPs. Three procedural specialties earn the most: orthopedics ($489,000), plastic surgery ($440,000), and cardiology ($410,000). And two primary care specialties are at the bottom: pediatrics ($202,000) and family medicine ($209,000). After endocrinology ($220,000), internal medicine is fourth lowest ($225,000). Specialists' pay has stayed ahead, despite policymakers' initiatives to pare back payments for specialists' procedures and efforts by hospitals and other employers to bolster primary care, Singleton says. He says some large systems have narrowed the gap between specialist and PCP income. Geisinger Health System in Pennsylvania, for example, has been providing a larger base salary and eliminating bonuses, but specialists still come out ahead, he says. That's because the relative value system for setting payments "rewards procedure-based medicine far more than diagnostic medicine," Singleton says. "Also, as specialists add caseload, perform more procedures, and utilize new technology, their income rises a lot faster than the pay boosts for primary care physicians," he says. In the Medscape survey, seven specialties have seen double-digit growth over last year: plastic surgery (24%), allergy & immunology (15%), otolaryngology (13%), ophthalmology (12%), pulmonology (11%), orthopedics (10%), and pathology (10%). Some exceptions to the boom are cardiology and oncology, which are each seeing little or no pay growth. For cardiologists, the Centers for Medicare & Medicaid Services (CMS) changed the way stent placements were reimbursed, and for oncologists, CMS changed payments for cancer drugs, which reduced oncologists' income. These specialties will see their income recover, Singleton says. In a testament to the remarkable resiliency of physicians' income, three of the specialties with double-digit growth had suffered income setbacks in 2016. Plastic surgery had almost no increase, pulmonology had a 5% loss, and allergy & immunology had an 11% loss in last year's Medscape report. "Specialists are seeing greater demand," Singleton says. "We have an aging population. More people need hip replacements, for example. Cancer patients are living longer. Cancer care is now a 5- to 10-year fight." A Somewhat Disappointing Year for PCPs In contrast to the income boom for specialists, last year's report was a bit disappointing for primary care physicians' income. Pediatrics, internal medicine, and family medicine were all close to the same income from the prior year. This was a reversal from their performance in the 2016 report, when internists were up 12%, pediatricians up 7%, and family physicians (FPs) up 6%. In the Medscape report, PCPs seemed to generally accept their relatively low earnings and lower increases in 2017. The report shows that 53% of family physicians, 52% of pediatricians, and 49% of internists felt that they were fairly compensated, which places them in the middle of the pack. Satisfaction rates for orthopedists (47%) and plastic surgeons (52%) were about the same, even though they are seeing double-digit increases this year and earn much more money than PCPs. In the report, those most likely to feel fairly compensated are emergency physicians (68%), dermatologists (65%), and psychiatrists (64%), while physicians in the least-likely-to-be-satisfied category were nephrologists (41%), endocrinologists (44%), and urologists (47%). For physicians unsatisfied with their compensation, Medscape also asked how much they felt they deserved to earn. Fully 79% of primary care physicians felt that they should be earning from 11% to 50% more than they currently do, with 5% believing that they should be earning double their income. Among specialists, 74% feel that they should be earning from 11% to 50% more, and 7% believe that their income should be more than twice as much. Self-employed PCPs Lose More Ground While self-employed specialists continue to earn more than their employed colleagues, the income gap between self-employed and employed PCPs is narrowing, as employers continue to bid up employed physicians' salaries. Overall, self-employed physicians earn 28% more than employed physicians: $343,000 versus $269,000 for employed physicians. That 28% gap was the same among specialists: $368,000 for self-employed specialists versus $287,000 for their employed counterparts. But the gap in primary care was considerably narrower, with self-employed PCPs earning $223,000 versus $214,000 for employed PCPs. What's more, the primary care gap has narrowed from 2015. Two phenomena have been narrowing the primary care gap. On one hand, self-employed PCPs saw a 2.6% decline in income from 2016 to 2017, according to the survey. Meanwhile, employers have been bidding up salaries for employed PCPs. The federal government's planned switch to value-based care, Singleton says, requires having a large base of PCPs, so hospitals and health systems have been eagerly building a "critical mass" of PCPs. In the past few years, hospitals that used to ask Merritt Hawkins to search for two or three new PCPs at a time are now asking for "20, 30, even 100 primary care physicians at one time," Singleton says. The hiring boom is not limited to hospitals and health systems, he says. Urgent care centers, federally qualified health centers, private equity firms, group practices, and even some solo practices are also hiring physicians. However, it is much easier for employed than self-employed physicians to leave their jobs. "You don't own the building, equipment, patient panels," he says. Very few employers have been enforcing non-compete clauses. Source
